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Business leaders seek policy support for SMEs

SME sector plays pivotal role in boosting GDP, they say

FE REPORT | December 19, 2023 00:00:00

FBCCI President Mahbubul Alam speaks at a seminar on 'Opportunities and Challenges in the SME Sector' at ERF auditorium in the city on Monday.

Business leaders at a seminar on Monday emphasised the crucial role of the Small and Medium Enterprise (SME) sector in boosting a nation's GDP, highlighting concerns about Bangladesh's relatively lower standing compared to the neighbouring countries.

They also underscored the need to prioritise the SME sector with a view to sustaining large industries and fostering overall economic growth.

The SME sector in Bangladesh currently contributes less than 30 per cent to the GDP, while the figure is 40-60 per cent in the neighbouring and competing nations, they said.

To address this gap, the speakers recommended several measures. These include facilitating banking finance, providing training to improve skills and documentation, establishing a dedicated cell or ministry for SMEs, and offering necessary policy support.

The Economic Reporters Forum (ERF) organised the seminar titled "Opportunities and Challenges in the SME Sector" with the support of National Bank at ERF auditorium in the city.

FBCCI President Mahbubul Alam addressed the event as the chief guest. Managing Director of National Bank Mehmood Husain, Dhaka Chamber of Commerce and Industry President Sameer Sattar and Managing Director of the SME Foundation Masudur Rahman, among others, also spoke.

The experts acknowledged the importance of a mental shift among bankers to foster genuine compassion for the development of the SME sector.

They called for easy procedures for accessing funds and low interest rates, which would significantly contribute to the growth of SMEs.

They also recommended streamlining the loan application process and eliminating intermediaries to make financing more accessible.

They highlighted the untapped potential of the SME sector, emphasising that connecting entrepreneurs with international markets is crucial.

Mahbubul Alam stressed the need for large industries to create opportunities for smaller entrepreneurs through backward linkages, drawing on examples from developed countries.

He stressed the importance of SMEs in achieving a smart and advanced Bangladesh and urged policymakers to prioritize the sector.

Citing an example, he said, "Reputed brand Toyota makes the engine of the car only and outsources remaining all other parts, but in our country, the larger industries make everything themselves without giving opportunity to the smaller ones.

He said SME entrepreneurs would not get the required financing.

"Funds are not available to genuine beneficiaries due to procedural complications and the interest rate is very high, 12-14 per cent," he said.

He also said there was a one per cent source tax for the SME sector which is unjustified.

The country's economy would not grow if SME entrepreneurs were not given opportunities, he added.

Mehmood Husain said achieving the bank's loan targets for the SME sector was challenging as it required many documents.

He highlighted psychological barriers in SME lending and underscored the need for simplified processes and providing training to the bankers to go easy on SME clients.

Sameer Sattar outlined four key steps for the SME sector, including the separation of medium enterprises from SMEs, government policy support, training for international market entry, and the establishment of a dedicated SME ministry.

He emphasized the necessity of political will and highlighted the role of SMEs in poverty alleviation.

Masudur Rahman pointed out the sector's challenges, including financing shortages and high interest rates.

He called for easy loan processing and raising market access for SMEs.

ERF President Refayet Ullah Mirdha presided over the seminar while General Secretary Abul Kashem moderated the meeting.

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